Royal Sundaram Alliance Insurance, a joint venture of Sundaram Finance and Royal & SunAllinace, is bullish on scaling up operations with the non-life insurance industry recording a robust growth this year. It is hoping to book a net profit of Rs.20 Crore in 2006-07 and a premium income of Rs.600 crore by sustaining the 31% growth.
It clocked a healthy 31% growth in gross premium at Rs.295 crore in the first six months ending September 30, 2006 against Rs.225 crore in the same period last year. It has clocked a net profit of Rs.7 crore against Rs.50 lakh in the first half of last year.
Royal Sundaram MD, Antony Jacob told ET last year that profit was hit in the first half due to floods in Mumbai. But, in this year, it has booked a good profit even after absorbing the losses in Gujarat floods. The joint venture is hoping to book a net profit of Rs.20 crore in 2006-07 and a premium income of Rs.600 crore by sustaining the 31% growth.
In 2005-2006, the premium income grew 39% at Rs.458.64 crore over Rs.330.70 crore in the previous year and it reported a net profit of Rs.8.63 crore (Rs.5 crore). The company has a capital base of Rs.140 crore with SF holding 74% and Royal & SunAlliance 26%. Mr. Jacob said it will take a call on further raising capital next year depending on the impact of detariff regime, scheduled to come into force from January 1, 2007.
He said that current year is witnessing a robust growth in the general insurance industry. "Whereas the annual growth in premium used to be 15% to 16%, for the first time, in the first five months of this year, non-life business has achieved the highest growth of 25%. This was on the back of strong economic growth and good business coming from major segments like motor, personal accident, health, fire and engineering. We see a good market with the value of new cars going up".
He said that Motor insurance is a major contributor to the total business and claimed a share of the 47% in the first half. He said the retail business accounted for a 35% share and the company is sticking to its strategy of notching up two thirds of the business from the segment in three years.
Regarding the business from TVS Group, he said, "We have been growing with them and the insurance done by the companies account for about 12% of the annual business."